What to Do With Your 401(k) When You Switch Jobs or Lose a Job

Barry Group
Jun 2
4 min read

Changing jobs or experiencing a layoff can be a pivotal moment in your financial life. One of the most important yet often overlooked aspects during these transitions is deciding what to do with your 401(k) from your previous employer. With trillions of dollars sitting in old retirement accounts across the U.S., making the wrong decision could cost you thousands in fees, taxes, or lost growth potential. According to the Bureau of Labor Statistics, the average American will hold 12 jobs in their lifetime, meaning they’ll face this decision multiple times. Yet, many people don’t know what their options are—or how to make the most of them.

Fortunately, there’s a solution that not only protects your hard-earned savings but can also provide guaranteed lifetime income — a Fixed Index Annuity (FIA). This article explores the options available for your 401(k) after a job change and why rolling it over into a Fixed Index Annuity may be the most strategic move for long-term financial security.

✅ The 4 Main Options for Your 401(k) After Leaving a Job

Leave it with your old employer’s plan Pros: You don't have to do anything immediately. Your money stays tax-deferred. Cons: Limited investment options, potential high fees, and you lose active management or employer support. You may also forget about it — a common issue, with over $1.65 trillion in forgotten 401(k) assets as of 2021 (Capitalize Research, 2021).
Roll it over into your new employer’s 401(k) Pros: Consolidates your retirement assets and allows continued tax-deferred growth. Cons: You’re limited to the new plan’s investment options, and some plans have high administrative fees.
Cash it out Pros: Immediate access to your funds. Cons: Big mistake for most — you’ll pay income taxes and a 10% early withdrawal penalty if you’re under 59½. Plus, you lose decades of tax-deferred growth potential.
Roll it over into an IRA or Fixed Index Annuity Pros: Full control, no taxes on rollover, and broader investment choices. This is where FIAs shine.

🛡️ Why a Fixed Index Annuity (FIA) May Be the Best Option

A Fixed Index Annuity is a financial product offered by insurance companies that combines the protection of a fixed annuity with the growth potential of a market index, such as the S&P 500 — but without the risk of market losses.

Here’s why FIAs stand out when rolling over a 401(k):

1. Protection from Market Losses

Unlike traditional investment options in a 401(k) or IRA that are tied directly to the stock market, a FIA offers zero downside risk. Even if the market crashes, your principal is protected.

“FIAs are designed for conservative investors who want market-linked growth without exposure to losses,” says Forbes Advisor (Forbes, 2023).

This feature is critical during uncertain economic times or for those nearing retirement. Losing 20–30% of your savings in a downturn could delay your retirement by years.

2. Tax-Deferred Growth

Just like your 401(k), money in a Fixed Index Annuity grows tax-deferred. You won’t pay taxes until you start taking distributions, allowing your money to compound more efficiently over time.

3. Guaranteed Lifetime Income

Perhaps the most powerful feature of an FIA is the option to turn your retirement savings into a stream of guaranteed income for life, similar to a personal pension.

According to a 2023 study by LIMRA, 73% of retirees with annuities felt confident their savings would last, compared to just 47% without them.

This lifetime income benefit means you can never outlive your money — a top concern for many retirees, especially as people are living longer.

4. Avoiding Sequence of Returns Risk

If you retire into a bear market and begin withdrawing from a volatile portfolio, the negative returns early in retirement can devastate your nest egg. An FIA insulates you from this sequence of returns risk by locking in gains and protecting principal.

5. Legacy Benefits and Spousal Protection

Many FIAs offer death benefit riders that ensure your beneficiaries receive any remaining value in the annuity. Spousal continuation options can allow a surviving spouse to continue receiving income, preserving family wealth.

6. No Contribution Limits on Rollovers

While new contributions to retirement accounts are capped annually (e.g., $23,000/year for 401(k) in 2025), rollovers have no limit. You can roll over your entire 401(k) balance — whether it's $50,000 or $1 million — into a FIA without tax consequences.

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🏦 Example: Rolling Over a $250,000 401(k) Into an FIA

Let’s say you’re 60 years old and have $250,000 in an old 401(k). You roll it into a Fixed Index Annuity with a 10-year growth phase and lifetime income rider. Assuming a 5–7% average credited interest (based on index performance with zero market risk), you could start drawing a guaranteed income of approximately $1,200–$1,500/month for life beginning at age 70.

👥 Who Should Consider a Fixed Index Annuity?

Workers age 50+ nearing retirement.
Those with old 401(k), 403(b), or TSP accounts.
Individuals worried about market volatility.
People who want to build a personal pension.
Those seeking tax-deferred growth and legacy planning.

⚠️ What to Look Out For

Not all annuities are created equal. It’s essential to:

Work with a fiduciary or trusted insurance advisor.
Compare carriers and contract terms.
Understand surrender charges, caps, participation rates, and income rider fees (typically 0.75–1.25% annually).

📝 Final Thoughts: Make Your 401(k) Work for You

Don’t leave your 401(k) sitting idle in an old account or risk losing it in a volatile market. Instead, take control of your retirement by exploring the benefits of a Fixed Index Annuity. It offers the balance of protection, growth, and guaranteed income that many Americans need — especially in an era where pensions are rare, and Social Security may not be enough.

📞 Next Step: Speak with a Retirement Income Specialist

At Barry Group, we specialize in helping individuals roll over their old 401(k)s into Fixed Index Annuities that provide guaranteed income for life, tax advantages, and wealth protection.

Schedule a Free Discovery Session📞 Call: 866-540-9122🌐 Visit: www.barrygroup.net

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